How is transferring my minority shareholding in a foreign company to my holding company in another EU country taxed under Spanish income tax?

When a Spanish tax resident transfers a minority stake in another foreign company to their own foreign holding company (for example, an Irish one), the transaction is taxed under their IRPF (Spanish personal income tax). This applies whether it is structured as a sale or as a contribution in exchange for new shares.

Capital gain in the savings income base

In both cases a capital gain or loss arises (arts. 33 and 34 LIRPF), taxed in the savings income base (base del ahorro). The rates for 2026 are:

• 19% up to €6,000
• 21% up to €50,000
• 23% up to €200,000
• 27% up to €300,000
• 30% above €300,000

• Sale to the holding company: the gain is the transfer value minus the acquisition cost plus associated expenses (art. 35 LIRPF). For unlisted shares, the minimum transfer value is the highest of three: the agreed price, the net book value per the last approved balance sheet, or the result of capitalising at 20% the average profits of the last three financial years (art. 37.1.b LIRPF). As a related-party transaction, it must also be carried out at market value (art. 41 LIRPF and art. 18 LIS). If payment is deferred for more than a year, the instalment method may be applied.
• Contribution or exchange for new shares: the acquisition cost is compared with the higher of two values: the nominal value plus share premium of the shares received, or the market value of the shares contributed (art. 37.1.d LIRPF).

Can the tax be deferred?

The share-for-share exchange regime (canje de valores, arts. 76.5 and 80 LIS) requires the acquiring company to obtain a majority of the voting rights, or increase it if it already holds one. A minority stake does not meet this.

The non-cash contribution of shares (aportación no dineraria, art. 87 LIS) does allow holdings of at least 5%. However, it requires the receiving company to be resident in Spain or to have a permanent establishment here to which the shares are allocated, so a foreign holding company does not qualify. The gain will therefore be the market value of the stake minus its acquisition cost.

Foreign taxes paid and valuation

A transfer tax such as Irish stamp duty is paid by the holding company as purchaser. It is not an income tax, so it neither reduces your IRPF nor entitles you to double taxation relief (art. 80 LIRPF).

For tax purposes, what counts is the market value at the date of the transaction:

• A recent funding round between independent parties is a solid benchmark.
• A lower value can be supported by an independent expert's valuation report as at the transfer date.
• That value can never fall below the minimums in art. 37.1.b LIRPF.
• A loss on a transaction with your own company will attract particular scrutiny.
• The price should match the one declared in the other country.

Risks of the foreign holding company

• CFC rules (transparencia fiscal internacional, art. 91 LIRPF): these apply if you control the holding company, its income is passive and it pays less than 75% of the tax it would pay in Spain. If they apply, you would have to include that income in your IRPF. For EU entities they do not apply if you can show valid business reasons and genuine economic activity, with staff and physical resources.
• Spanish residence (art. 8.1 LIS): the holding company is treated as Spanish resident if its place of effective management is in Spain. To avoid this you need directors with real decision-making power in the other country, along with board meetings, management and a bank account there.

Alternatives and reporting obligations

With a foreign holding company and a minority stake there is no tax-neutral route. The most prudent option may be not to transfer the stake and use the holding company only for future investments.

Another option is to contribute the stake to a Spanish-resident holding company under art. 87 LIS, backed by valid business reasons (art. 89.2 LIS). Dividends from the subsidiary could then be 95% exempt (art. 21 LIS).

As for reporting obligations:

• On Modelo 720 (Spanish overseas assets declaration) you must report the disposal of the stake and, where applicable, the change in the holding company.
• The gain or loss is declared in your IRPF return.
• A filing with the Foreign Investment Register (Registro de Inversiones Exteriores) may be required, depending on the type of transaction.